Economic Update with Richard D. Wolff

Episode: Economics of our Politics

Date: March 14, 2016
Host: Richard D. Wolff
Producer: Democracy at Work

Episode Overview

In this episode, Richard D. Wolff examines how contemporary economic crises and political shifts are deeply intertwined. He discusses recent events in Europe and the U.S., focusing on central bank policies, labor struggles, airline industry malpractices, the roots of economic crises, and crucially, the fundamental relationship between capitalism and democracy. Wolff provides a critical analysis of how economic systems drive political behaviors, highlighting rising discontent in both Europe and the U.S. as signs of deeper system breakdowns.

Key Discussion Points and Insights

1. Europe’s Economic Crisis and Central Bank Responses

• European Central Bank Actions (03:30)

  • The European Central Bank (ECB) is adopting increasingly desperate measures to counteract declining economic conditions—lowering interest rates, negative interest rates, pumping money into the economy.
  • These steps echo U.S. Federal Reserve actions, aiming to spur growth but are ultimately “extreme and dangerous” (06:40).
  • Economic policy “competition” (currency devaluations) among the U.S., Europe, and China hurts global stability.

• Quote:

  “They are nothing short of desperate. And the impact of what the Europeans are doing will be felt in China and in the United States...”
  —Richard D. Wolff (04:50)

• Effects of Negative Interest Rates (08:40)

  • Explains the rare concept where depositors can lose money just by holding funds in banks.
  • Designed to force banks to lend more, but underscores the failures of standard monetary policy.
  • No fundamental questioning of capitalism itself—just escalating the same failed strategies.

• Quote:

  “It is a capitalist system that doesn’t work even on its own terms, even for its major boosters.”
  —Richard D. Wolff (11:10)

2. French Labor Protests and the Politics of Precarious Work

• Mass Mobilization against Labor Law Changes (12:00)

  • Hundreds of thousands of French students and workers protest reductions in job security protections, even under a Socialist government.
  • French labor law traditionally requires just cause for termination; proposed reforms would make layoffs easier for employers.
  • Employers frame deregulation as a way to “help the unemployed,” but Wolff highlights this as a profit-driven pretense.

• Quote:

  “The argument that the employers are worried about unemployed folks or worried about the sufferings of people whose jobs are precarious is not worth taking cognizance of.”
  —Richard D. Wolff (17:40)

• The International Trend of Precarious Work (19:00)

  • The rise of insecure, “precariat” jobs is global—from the U.S. and the UK to Japan.
  • Employers seek greater flexibility as a means to extract more profit and roll back past labor victories.

• Wolff’s Critique of Employer Arguments (21:00)

  • Points out the lack of genuine efforts for government jobs programs by employers.
  • Urges American unions and students to follow the French example in mass, collective resistance.

3. U.S. Airline Industry and Political Corruption

• Outrageous Airline Fees and Political Inaction (23:00)

  • Senators Markey and Blumenthal want to limit exploitative airline fees, but legislation is blocked by House leadership.
  • Reveals the close, personal ties between the Transportation Committee chair, Bill Shuster, and airline lobbyists (his girlfriend is VP for Airlines for America).

• Quote:

  “You couldn’t make this stuff up. ...the congressman who’s putting the kibosh on relief for these fees has a girlfriend who works for the lobbying company helping the airlines.”
  —Richard D. Wolff (26:45)

  • Example highlights the entanglement of government and business interests.

4. The Real Root of the 2008 Economic Crisis

• Debunking the “Government to Blame” Narrative (28:15)

  • Addresses claims (often from libertarians) that government intervention (e.g., Community Reinvestment Act) caused the subprime meltdown.
  • Details why this is false: most subprime loans weren’t covered by the law; banks were not forced to make imprudent loans.

• Quote:

  “This is not a matter of interpretation, which we can admit can be varied from time to time. But this is not, this is not credible. ...It is stone cold false.”
  —Richard D. Wolff (31:00)

• The Capitalist-Government Nexus (33:28)

  • Argues it’s not just government nor just corporations—it’s the close partnership between big business and government that underpins modern capitalism.
  • Warns against scapegoating government to deflect criticism from the failures of capitalism as a whole.

5. Economics 101: Capitalist Value Creation and Distribution

• How Capitalism Produces and Extracts Value (37:00)

  • Uses a simple production example to show how workers create more value than they are paid, generating profit for capitalists.
  • Profits are distributed to shareholders, many of whom have no involvement in production—accentuating inequality.

• Quote:

  “Most of the rich people in the United States are rich because they own shares of stock and get these quarterly dividend checks. Do you have to work on the company to get a dividend check? No.”
  —Richard D. Wolff (43:10)

  • Suggests worker cooperatives as an alternative: if workers ran enterprises, they would receive both wages and profits.

6. The Politics of American Capitalism and the Breakdown of Party Alliances

• Capitalist Political Vulnerability (46:00)

  • In a democracy with universal suffrage, the capitalist elite (a tiny fraction of the population) are politically vulnerable to the majority.
  • To protect their power, elites form alliances with major political parties.

• The Party System’s Role (49:50)

  • Explains the “deal” between top capitalists and parties: capitalists provide money, parties recruit mass bases by offering policy favors.
  • Republicans reach out to religious groups, promising cultural policy support in exchange for votes; Democrats court unions, promising wage and benefit concessions.

• Memorable Explanation:

  “The political party is supposed to solve that problem: create huge communities that will support capitalism in exchange for having a party that uses the government to give them something for their community. ...When it works, as it has for most of the last century, it keeps capitalism in the driving seat.”
  —Richard D. Wolff (52:00)

• Cracks in the Alliance and Rise of Outsider Candidates (53:50)

  • Feels both Republican and Democratic mass bases feel neglected and betrayed (evangelicals, labor unions), feeding crises in each party.
  • Outpouring for non-establishment candidates (Trump, Sanders) signals a breakdown of traditional party alliances.

• Political and Economic Implications (56:00)

  • Describes recent meetings of political and economic elites “terrified about the end of the Republican Party because of Trump,” and Democratic establishment anxieties about Sanders.
  • Argues the real problem is not particular candidates but the disintegration of institutions that have upheld the capitalist system.

• Quote:

  “Your problem is a system that doesn’t work. Your second problem is when your system doesn’t work, you can't face that reality because you are too committed to the system. So you got a problem, and you can’t face where the solution lies. That makes you desperate.”
  —Richard D. Wolff (57:25)

  • Predicts ongoing political upheaval as symptoms of deeper capitalist crisis.

Notable Quotes and Memorable Moments

• On Global Economic Policy:

  “We're beginning to see the competitive devaluation of currencies as the players try to improve their own situation in ways that damage those of others… manifestations of a global capitalist system that is unable to solve its problems.” (06:00)

• On Employer Rhetoric in France:

  “The employers want us to believe that they’re looking to relax protections of workers because of their deep concern about the unemployed. ...This is exactly what it sounds: an effort by employers to get a better deal.” (15:35)

• On Political Corruption:

  “...the congressman who's putting the kibosh on relief for these fees has a girlfriend who works for the lobbying company helping the airlines. You couldn't make this stuff up.” (26:45)

• On Defending Capitalism:

  “Capitalism isn’t working... that’s why it’s clever for libertarians to blame the government—after all, libertarians like to blame the government for virtually everything...” (33:10)

• On Party Alliances:

  “The capitalists need a mass base to support them. Otherwise, they’re too vulnerable...” (51:32)

• On Systemic Breakdown:

  “If you have a sense that the political and economic situation in the United States is beginning to look like it’s spinning out of control, you’re right, it is.” (57:05)

Important Timestamps

• 03:30 — European Central Bank and negative interest rates
• 12:00 — French labor protests
• 19:00 — The rise of precarious work
• 23:00 — U.S. airline fees and congressional corruption
• 28:15 — The real causes of the 2008 crisis
• 37:00 — Economics lesson: value production under capitalism
• 46:00 — Political vulnerability of the capitalist elite
• 53:50 — The breakdown of party mass bases and the Trump/Sanders phenomenon
• 57:05 — Systemic breakdown and elite anxiety

Flow and Tone

Richard D. Wolff’s tone is clear, passionate, and critical of mainstream economic and political narratives. He uses illustrative examples, reasoned analysis, and often biting sarcasm to highlight what he sees as systemic flaws in capitalism and the political structures that support it. Throughout the episode, he calls for greater public consciousness, collective action, and exploration of alternative economic arrangements, notably worker cooperatives.

Conclusion

“Economics of our Politics” offers a sweeping critique of the interconnections between economics and politics in both Europe and the United States. Wolff challenges mainstream explanations for economic crises, exposes the alliance between capital and political parties, and illuminates the rising turbulence in political systems as symptoms of deeper capitalist dysfunction. His call is for listeners to recognize these patterns and engage collectively for systemic change.